The UK and the US have been heavily impacted by the COVID-19 pandemic. But what is the impact on these critical financial services sectors, and what happens next?
Last Summer, we held a discussion webinar, co-hosted with the Institute and Faculty of Actuaries, that took a deep-dive into what the pandemic means for these sectors as a result of any changes to expected mortality, life expectancy and health.
One year on, we reconvened our panel of expert actuaries to ask:
- How has the pandemic affected the views of actuaries on future longevity, mortality and health?
- What was expected/ predictable, and what has changed?
What has this, and will this, mean for financial services, including retirement income, pension schemes, annuities in the US and UK?
- What happens next?
Minimizing AI Hallucinations/Confabulations and the Path towards AGI with Exa...
COVID-19 in the UK and US: Understanding the impact on insurance, retirement income and other financial services risks
1. COVID-19 in the UK and US:
Understanding the impact on
insurance, retirement income and
other financial services risks
Join the conversation: @ilcuk
#WhatHappensNext
2. About ILC
We are the UK’s specialist think
tank on the impact of longevity
on society, and what happens
next.
We are one of the founding
members of the ILC Global
Alliance, an international
network on longevity with
members across 16 countries.
Join the conversation: @ilcuk
#WhatHappensNext
6. Health impacts
Source: Office for National Statistics – Deaths registered weekly in England and Wales
Source: Office for National Statistics – Estimates of the population for the UK,
England and Wales, Scotland and Northern Ireland & Deaths registered weekly
in England and Wales
Matt Gurden - ILC Webinar COVID-19 in the UK & US
Source: Coronovirus.data.gov.uk – case data
7. Economic impacts
COVID Loan Schemes
• £74 billion
• 1.6 million loans
Matt Gurden - ILC Webinar COVID-19 in the UK & US
Source: Office for National Statistics
Insurance support
• Trade credit & Film/TV production
• > £10 billion
Source: Office for National Statistics with Office for Budget Responsibility data
9. Formation + Aims of Covid19 ARG (Voluntary)
• Reach out to people with right skills – medical + epidemiological
insights (could not wait/advertise)
• Set up outside of auspices of professional body – less restrictive
• R in ARG is for RESPONSE not research
• Help to identify reliable path and narrative for decision makers
• Counter clearly false narratives
• Independent – apolitical advantage
• Hopefully clarify and simplify often very dense technical report/papers
• Quick best endeavour bulletins on topical matters – internally peer
reviewed and often out within days initially, but over time within
hours.
9
10. Activity
• Linked in account
• https://www.linkedin.com/company/covid-19-actuaries-response-group/
• Web page
• https://www.covid-arg.com/
• Bulletins summarising papers on topical Covid-19 matters
• Weekly now biweekly Friday report – short commentaries on wide range of subjects
• Blogs – quick response on issues getting attention
• Twitter account – group + personal
• https://twitter.com/COVID19actuary
• Current topics
• Live discussions
• Facebook - closed
10
18. 18
Classification: Confidential
Historical mortality rates up to 2019
0.75%
1.00%
1.25%
1.50%
1.75%
2.00%
2.25%
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
%
mortality
rates
Male SMRs compared to historic trends
male SMR
male trend 2000-2011
male trend 2011-2019
Data source: ONS England & Wales population data
19. 19
Classification: Confidential
And now with 2020 added…
0.75%
1.00%
1.25%
1.50%
1.75%
2.00%
2.25%
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
%
mortality
rates
Male SMRs compared to historic trends
male SMR
male trend 2000-2011
male trend 2011-2019
Data source: ONS England & Wales population data
20. 20
Classification: Confidential
• Is it a one off event?
• Does it put us on a new trajectory? Different shape, different slope?
• Are there long term consequences?
What about 2020?
21. 21
Classification: Confidential
• Increase in desire to transfer longevity risk to the ‘experts’
Strong market for bulk annuity transactions
• Life expectancy continues to increase
• Multiple employers / careers
• Complex topic of social care
• Increase in focus on healthy life expectancy
Creating the long-term opportunity for insurers to provide customers with the right products
and the right guidance at the right times
• Social and economic impact of people living longer lives
• Increase in gap between socio-demographic groups during pandemic
Opportunity for life insurance companies to use their ‘expertise’ to provide clear data to
assist with national conversations
Future Opportunities
23. COVID-19 in the UK and US:
Understanding the impact on insurance, retirement
income and other financial services risks
Douglas Anderson
15 July 2021
24. 24
Pension derisking has continued apace ….
Source: Willis Towers Watson - De-risking report 2021
Continued demand for
longevity hedging
despite perception that
life expectancy has
stalled
25. 25
Longevity is now biggest pension fund risk
1
Longevity now around half of total risk2
61%
42%
27%
20%
28%
40%
59%
69%
2006 2010 2018 2020
Equities Bonds
Significant financial derisking
Leaves longevity as
biggest residual risk
Source: Club Vita - Top Charts 24 – Longevity as a proportion of total risk (April 2021)
26. 26
Increased uncertainty on future path
Bump in
the Road
Long Road
to Recovery
Innovation in
Adversity
Healthcare
Decline
Source: Club Vita - COVID-19 longevity scenarios: a bump in the road or a catalyst for change
27. 27
Nascent campaign to reduce longevity inequality:
ESHG - putting the H into ESG
Source: Business for Health
29. 29
Hard-pressed
Standardising categories
Insurers Pension funds
Hard-pressed
Mortality
Longevity
Making do
Mortality
Longevity
Comfortable
Mortality
Longevity
Comfortable
Making do
... leads to
liquidity
longer duration
volume
Source: Club Vita - Longevity Trends: Does one size fit all?
30. Thank you for your support
Douglas Anderson FIA CERA FSA
Founder of Club Vita
douglas.anderson@clubvita.net
+44 7788 376327
For more longevity insights,
please follow Club Vita
32. US Healthcare
in the Aftermath of
the COVID-19
Pandemic
International Longevity Centre UK event
15 July 2021
33. Daily COVID-19 Cases in the U.S.
33
Source: https://developer.nytimes.com/covid
7-Day Moving Average as of
8 July 2021 is 16,208
34. Deferred Care
34
• Initial signs health care utilization is
returning to pre-pandemic levels.
• Some physician office and emergency
room visits will be replaced
permanently by telemedicine (see next
slide).
• Some care will be forgone (e.g. annual
physicals) and will not be replaced in
2021.
• Some care will be deferred into 2021
(e.g., screenings, elective surgeries, etc.)
and will add to normal utilization.
During the Pandemic Post-Pandemic
https://catalog.data.gov/dataset/indicators-of-reduced-access-to-care-due-to-the-coronavirus-pandemic-during-last-4-weeks
Source: Household Pulse Survey from Data.Gov
35. Telemedicine
35
• Telehealth will be more heavily utilized post-
pandemic but not likely at the levels
experienced during the pandemic, at least
initially.
• Consumers have likely identified the benefit
over more costly physician office and
emergency room visits.
• Providers are seeking greater reimbursement
levels for telehealth that might offset savings
from its use versus less cost effective
alternatives.
• Future usage and reimbursement levels (as
compared to physician office and emergency
room visits) will determine cost effectiveness
of telehealth versus traditional visits.
During the Pandemic Post-Pandemic
Source: The Commonwealth Fund
36. Mental Health
36
• Mental health utilization will
exceed even pre-pandemic levels as
a result of conditions left untreated
during the pandemic.
• Mental health conditions may also
be exacerbated by social unrest in
addition to the fear of contracting
COVID-19 and the isolation due to
social distancing preferences and
policies
During the Pandemic Post-Pandemic
37. Behavioral Health
37
Behavioral health issues
likely to have some limited
affect in 2021 but, if left
unchecked, could be a
growing issue in 2022 and
beyond
During the Pandemic Post-Pandemic
38. Chronic Condition Management
38
• Concern exists that patients with
chronic condition like diabetes,
hypertension, heart disease, and
others lapsed in their management
during the pandemic will create a
need for more intensive, higher cost
care post-pandemic.
• Affect could be mild at first and
could have implications for many
years after the pandemic .
During the Pandemic Post-Pandemic
Source: Strata Decisions Technology
39. COVID-19 “Long Haulers”
39
• Respiratory and gastrointestinal symptoms
are accompanied by short- and long-term
neuropsychiatric symptoms and brain
sequelae.1
• Some patients suffer anosmia, cognitive and
attention deficits (i.e., brain fog), new-onset
anxiety, depression, psychosis, seizures, and
even suicidal behavior even after respiratory
symptoms and are unrelated to respiratory
insufficiency.1
• The long-term implications are not clear but
the affects on the brain will likely lead to
ongoing treatment for affected patients.
During the Pandemic Post-Pandemic
Source: Fair Health “A Detailed Study of Patients with Long-Haul COVID”
1 “How COVID-19 Affects the Brain”
Maura Boldrini, MD, PhD; Peter D. Canoll, MD, PhD; Robyn S. Klein, MD, PhD
40. Health Care Provider Implications
40
• Health care providers claim lost revenue in 2020
despite serving COVID-19 patients.
• The American Hospital Association estimated losses
to hospitals and health systems of at least #323.1
billion in 2020 (June, 2020).
• Health care insurance companies saw claim cost
decrease despite covering COVID-19 patients.
• The US Congress passed the CARES act and the
PPPHCEA which together provided $175 billion in
emergency funding for hospitals and other health
care organizations.
• Health care providers likely to
promote need for services deferred
during pandemic.
• Health care providers are
attempting to leverage the
pandemic for higher
reimbursement rates from major
payors.
• Further consolidation due to lost
revenue from social isolation
without significant COVID patients
as an offset could also push up
prices.
During the Pandemic Post-Pandemic
44. MAX J. RUDOLPH, FSA CFA CERA MAAA
Rudolph Financial Consulting, LLC
July 15, 2021
Future Pandemics – Better the Next Time
45. Why U.S. Insurers Survived COVID
• Stimulus from Central Banks and Treasury
• Mortality primarily impacted old
• Infrastructure was in place to work from home
• Deferred health care
• Reduced mileage
45
48. Aging and Retirement
Aging and Retirement
Things to think about before “next time”
• What can U.S. learn from others?
• Given interest in “liberty” in U.S., what happens if next pandemic is Ebola?
Reaction by culture
• Improve data collection - standardization
• Why do we have to rely on universities and media to aggregate?
• Aggregation and privacy gridlock
• Revisit safety nets (unemployment amounts, employment ties to health
care), allow creative destruction
• Revisit all pandemics of last 200 years
• What was 1889-90? Coronavirus? Common cold today?
• Does virus retreat with herd immunity or mutate
48
49. Correlation between Mitigations and U.S. Infection Level
(Weekly Mitigation Average and USIL one Week Later, September - February)
49
It is difficult to draw conclusions about why a mitigation would be strongly positively or negatively correlated with the U.S. Infection Level. Some
factors that might influence the power of a mitigant as a forward indicator include how easy it is to implement, who is in control of the mitigation
(personal, business, governmental), and what other mitigants are logistically and politically tied into that mitigation.
https://www.soa.org/resources/research-reports/2020/covid-19-mitigation/
50. • Rudolph Financial Consulting, LLC
• ERM/ALM strategist
• Private investor/Researcher
• Professor, Creighton University
• Emerging risks/climate/pandemics
• Professionalism
• Society of Actuaries Board of
Governors
• SOA President’s Award
• SOA Volunteer Award
• Investment Section Chair
• Chair, Climate and Environmental
Sustainability Research Committee
Max J. Rudolph, FSA CFA CERA
MAAA
max.rudolph@rudolph-
financial.com
Twitter @maxrudolph
Omaha, Nebraska, USA
(402) 895-0829
NOT INVESTMENT ADVICE!
Thank you!
50
51. Anna M. Rappaport
Society of Actuaries Aging and
Retirement Steering Committee
Join the conversation: @ilcuk
#WhatHappensNext
52. ANNA M. RAPPAPORT, FSA, MAAA
Chair, SOA Committee on Post-Retirement Needs and Risks
July 15, 2021
Retirement Risks and COVID-19:
Findings from Society of Actuaries Research on COVID-19 and Retirement
53. Aging and Retirement
Aging and Retirement
Key Findings: COVID-19 and Retirement
• Two very different sets of results: people financially hurt and those not hurt
• Minorities more affected by COVID-19
• Women more affected by family challenges and because of longer life spans
• Strong reasons to revisit opportunities for older workers, retirement ages and
working in retirement
• Longer term health effects of COVID-19 unknown
• Longer term economic issues are unknown
• Expect greater focus on emergency funds
• Many jobs likely to be restructured and changes in compensation and benefits
may follow
53
54. Aging and Retirement
Aging and Retirement
COVID-19 added to retirement system challenges
New Challenges Challenges in 2019 (Pre-COVID)
Job loss, layoffs and reduced work schedules Social Security – current scheduled taxes not adequate to support
benefits; adjustments needed
Longer term health issues Major shifts in responsibility to the individual and major gaps in
financial literacy
Women leaving labor force About half the workforce did not have employer-sponsored retirement
benefits, including many part-timers and gig workers
Small businesses going out of business or
shrinking – e.g. restaurants
Racial and ethnic minorities, women often have lower benefits –
unclear if solely due to pay differentials
People wanting to retire differently Major decline in employer risk taking (DB and retiree health)
Retirement funds used early during COVID Many DC plans do not offer an income stream post-retirement
People stopped/reduced saving Gaps in benefits likely to grow in the future
54
55. Aging and Retirement
Aging and Retirement
Policy and Societal Questions Related to Retirement Plans
• Will the aging society and national retirement policy become a priority?
• How will Social Security issues be addressed?
• Will policymakers seek to encourage more employer-sponsored plans?
• Will policymakers seek to improve opportunities for older workers?
• Will jobs be restructured and will there be new models of employment?
• How will people without access to employer plans build retirement funds? Will state-sponsored savings
plans grow to address those not covered by an employer-sponsored plan?
• The 2019 SECURE Act allows employers to join larger plans that bring a number of employers together.
Will pooled employer plans established in the SECURE Act increase the availability of plans for small
businesses?
Note that the Secure II Act has been introduced into Congress on a bipartisan basis.
https://waysandmeans.house.gov/media-center/press-releases/neal-and-brady-introduce-new-
bipartisan-legislation-strengthen-americans
55
56. Financial Perspectives on Aging and
Retirement Across the Generations
56
Top 5 of Top 10 Findings
The impact of the pandemic has been uneven: 36% of respondents say the COVID-19 pandemic negatively
effecting their overall financial situation while 14% say the impact of the pandemic on their finances are positive.
While all generations say they reduced spending as a result of the pandemic, most have not taken other financial
actions.
Job disruption as a result of the pandemic is most common for Millennials, with 4 in 10 experiencing job loss or a
pay decrease. This is true for 33% of Gen Xers and 21% of Late Boomers.
35% of workers have changed or considered changing when they plan to retire as a result of COVID-19 with most
of these respondents pushing their retirement further back.
Worries about climate change impacting retirement is a highest among Millennials. They are more likely to believe
climate change will impact their health, increase the likelihood of damage to property, and influence where they
will live in retirement.
For most potential retirement risks, the level of concern are greatest with the younger age groups. But younger
generations are also more likely to have the shortest planning horizons. The pandemic does not seem to have
caused a significant increase in level of concern around retirement risks in general, but many are worried about the
impact the pandemic will have on their retirement savings.
57. Financial Perspectives on Aging and
Retirement Across the Generations
Financial Impact Findings from SOA Generations Survey
The Impact of the COVID-19 Pandemic Is Uneven
While the pandemic has impacted everyone across the generations, the financial impact appears to be
very imbalanced.
In terms of impact on employment:
• In total, 40% of Millennials, 33% of Gen Xers, and 21% of Early Boomers have experience some sort
of job loss or pay decrease.
• However, 11% of Millennials had an increase in income and 43% had no impact.
Additionally, 36% say their financials overall were negatively impacted by the pandemic. Another 50%
saw no impact and 14% were positively impacted.
• This imbalance is greater with the younger generations—41% of Millennials were negatively
impacted while 21% were positively. On the other hand, 7 in 10 in the Silent Generation saw no
impact financially.
• This pattern holds when looking at the impact on income, assets, and level of debt across the
generations. Overall, about 1 in 3 say their level of income was negatively impacted. 23% say the
same about their level of debt and a similar share experienced a negative impact to their assets.
• For Millennials, 34% saw a negative impact on their income (vs. 24% positive), 24% saw a negative
impact on their assets (vs. 22% positive), and 27% say there was a negative impact on their debt
level (vs. 21% positive).
57
36%
29%
23%
22%
50%
56%
65%
64%
14%
15%
12%
14%
Financials
overall
Level of
income
Level of
debt
Asset level
Negative impact No impact Positive impact
Financial Impact of COVID-19
58. Aging and Retirement
Aging and Retirement
Questions about the future of the retirement system
(COVID-19 is a disruption and encourages us to rethink)
• Do we have the right retirement system?
• Is too much risk placed on the employee? Who should bear retirement risks?
• What changes to Social Security, Medicare and Medicaid will improve the system?
• How can we encourage people to establish emergency funds?
• How will people without access to employer plans build retirement funds?
• As the population ages, will retirement risk increase?
• How many employees will want to defer retirement?
• How many employees will leave work because of fear of getting sick?
• Will there be more interest in phased retirement?
58
59. Aging and Retirement
Aging and Retirement
SoA Research
• COVID-19 is a major topic 2021 Survey: Financial Perspectives on Aging
and Retirement Across the Generations
• Have identified issues and immediate impact on people, retirement and
related benefits
• SOA has issued series of 6 retirement related reports
• SOA has published collection of COVID-19 essays – more are encouraged
59
60. Aging and Retirement
Aging and Retirement
Resources – Society of Actuaries
Retirement Resources
• Impact of COVID-19 on Retirement Risks -- https://www.soa.org/resources/research-reports/2020/covid-19-retirement-
risk/
• Defined Benefit Plans and COVID-19: Immediate Challenges for Plan Sponsors -- https://www.soa.org/resources/research-
reports/2020/defined-benefit-covid-19-challenges/
• Defined Contribution Funds, Emergency Funds, and COVID-19 -- https://www.soa.org/resources/research-
reports/2020/dc-emergency-funds-covid-19/
• COVID-19 and Working in Retirement -- https://www.soa.org/resources/research-reports/2020/covid-19-working-
retirement/
• Impact of COVID-19 on Senior Housing and Support Choices -- https://www.soa.org/resources/research-
reports/2020/covid-19-senior-housing/
• Impact of COVID-19 on Family Dynamics in Retirement -- https://www.soa.org/resources/research-reports/2020/covid-19-
family-dynamics/
General Resources – COVID-19 Statistics Update July 8, 2020 --
https://www.soa.org/globalassets/assets/files/resources/research-report/2020/covid-19-key-stats-july.pd
60
61. Aging and Retirement
Aging and Retirement
Resources – Society of Actuaries, cont’d
Impact of COVID-19 on Aging and Retirement – Essay Collection
The Society of Actuaries’ Aging & Retirement Strategic Research Program is pleased to make available essays received in response to
its Call for Essays on the impact of COVID-19 on aging and retirement.
• Will Retirement Change Due to COVID-19?
by Linda Koco
• Lessons for Retirement Annuities from Coronavirus Induced Economic Turbulence
by Thomas L. Hungerford
• Effects of Ephemeral Mass Unemployment
by Jack Lund
• Are CCRCs and Senior Housing Communities a Good Choice? COVID-19 and Risk in Arrangements for Senior Housing and Support
by Anna M. Rappaport
• Managing “Black Swan” Stock Market Risks in Retirement
by Kenneth Steiner
SOA COVID-19 home page
• https://www.soa.org/programs/covid-19/research-podcast/#research
61
62. Q&A
Please submit your questions to panellists via
the Q&A tab
Join the conversation: @ilcuk
#WhatHappensNext
64. Future of Ageing 2021: Reimagining
ageing in a changing world
Register at
http://futureofageing.org.uk/
@ilcuk
#FutureOfAgeing
Date: Thursday, 2 December 2021
Time: 9.00am – 5.00pm GMT
Location: Wellcome Collection, London